MOODY'S UPGRADES INDUSTRY & CONSTRUCTION BANK'S FOREIGN CURRENCY DEPOSIT RATINGS AS WELL AS THE SENIOR AND SUBORDINATED FOREIGN CURRENCY DEBT RATINGS FOLLOWING THE TRANSFER OF CONTROLLING INTEREST TO RUSSIA'S VNESHTORGBANK
January 17, 2006
US$ 700 million in outstanding debt securities affected
Moody's Investors Service has upgraded the
long- and short-term foreign currency bank deposit ratings of Industry &
Construction Bank (ICB) from Ba1/NP to Baa2/Prime-2 -- the country
ceiling for foreign currency bank deposits. The bank's senior unsecured
and subordinated foreign currency debt ratings have also been upgraded to
A3 from Ba1 and to Baa1 from Ba2, respectively. The Financial Strength
Rating (FSR) remains unchanged at D- (D minus). The outlook for the
bank's long-term and short-term deposit ratings as well as for the D- FSR
is stable, while the outlook for senior and subordinated debt ratings is
positive. At the same time, Moody's Interfax Rating Agency, which is
majority-owned by Moody's, has upgraded the long-term national scale
credit rating of ICB to Aaa.ru from Aa1.ru.
According to Moody's and Moody's Interfax ("Moody's"), the Baa2/Prime-2/D-
global scale ratings reflect ICB's global default and loss expectation,
while the Aaa.ru national scale rating reflects the standing of the
bank's credit quality relative to its domestic peers.
Today's rating actions reflect the finalisation of the acquisition of a
75% + 3 shares stake in ICB by Russia's Vneshtorgbank (VTB), rated at
Baa2/Prime-2/D- (all ratings with stable outlooks), and the latter's
strong propensity and capacity to support ICB in case of need. While both
banks are rated at the country ceiling for foreign currency bank deposits
(which is below the unpublished global local currency ratings for both
banks), some rating differential between the two still remains in the
unpublished local currency and published foreign currency debt ratings to
reflect ICB's status as VTB's subsidiary. On the other hand, the
positive outlook on ICB's senior unsecured and subordinated foreign
currency debt ratings is based on Moody's expectation that ICB will be
fully absorbed by VTB, ceasing to exist as a separate legal entity, hence
resulting in full rating convergence.
Industry & Construction Bank is headquartered in St. Petersburg, Russian
Federation. It was formerly the largest non-state-owned bank in the
Northwest region, and reported total assets of US$3.6 billion under IFRS
(audited) as of 31 December 2004.
NATIONAL SCALE RATINGS
Moody's Interfax Rating Agency's National Scale Ratings (NSRs) are
intended as relative measures of creditworthiness among debt issues and
issuers within a country, enabling market participants to better
differentiate relative risks. NSRs in Russia are designated by the ".ru"
suffix. NSRs differ from global scale ratings, as assigned by Moody's
Investors Service, in that they are not globally comparable to the full
universe of Moody's rated entities, but only to other rated entities
within the same country.
ABOUT MOODY'S AND MOODY'S INTERFAX
Moody's Interfax Rating Agency specialises in credit risk analysis in
Russia and is 51% owned and controlled by Moody's Investors Service, a
leading provider of credit ratings, research and analysis covering debt
instruments and securities in the global capital markets. Moody's
Investors Service is a subsidiary of Moody's Corporation (NYSE: MCO),
which reported revenues of US$1.4 billion in 2004, employs approximately
2,500 people worldwide and maintains offices in 19 countries. Further
information is available at www.moodys.com.
Country of riskRussia
Redemption (put/call option)
М/S&P/F— / — / —